If you are a consumer, exclusive agreements are rarely a good thing when it comes to the Apple iPhone and AT&T. The answer to this question depends on what side of the market you belong to. Alternatively, exclusive contracts can help retailers and service providers increase profitability and market share. Here’s an overview of both sides.
Apple and AT&T have reached an agreement to make the latter the exclusive provider of cell phone service for Apple’s highly sought-after iPhone. This is an advantageous arrangement for both parties, as Apple will make money off of each device sold and collect royalties from AT&T for every contract activated by an iPhone user. Meanwhile, in theory, AT&T stands to gain from each new sale of the iPhone. In addition, it also saves Apple from having to create different devices or SIM cards for other mobile service providers. However, this partnership between Apple and AT&T has triggered a widespread hacking movement that appears beneficial to Apple despite their claim otherwise. Unlocked phones have become something of a status symbol, a way of resisting corporate America – making it likely that the hacking helps with advertising and sales more than anything else. On the other hand, this presents no benefit at all to AT&T.
The exclusive agreement between Apple and AT&T may be a disappointment to customers who are tied to another cell service provider. Additionally, if someone wants the content features of the iPhone but not its phone function, they will not find what they need in an iPod. They will be faced with signing up for AT&T’s cellular services to use their phone when activating an iTunes account. This limits access to the iPhone for those unable or unwilling to sign up for AT&T’s service and decreases any potential competition in the market. Ultimately, this partnership hinders consumer choice and restricts market access for those looking to buy the iPhone.
Despite everyone’s dislike of exclusion, there is proof that exclusive agreements can be broken. It appears this is the case with the Apple iPhone and AT&T agreement. Hackers have found a work around, resulting in free unlocks for versions up to 1.1.3, as well as software for less than $100 that will unlock iPhones quickly and easily. This allows users to use the phone on either T-Mobile or AT&T in the US or other standard GSM networks; all that is needed is a SIM card. Moreover, you do not even have to be tied to any cellphone service provider – it is possible to download content via computer or WiFi and use Skype VOIP service instead. Ultimately, it seems AT&T could end up being the loser in this situation.
